It’s that time of year again when spending is reviewed. Every year I have been in Parliament spending has gone up, and every time all the debate has been about cuts. That’s the way the public sector likes to organise its debates. There are cuts in forecast increases, cuts in real rather than cash spending, cuts in baseline budgets that overstated the spending, and sometimes even real cuts in real activities. Whatever the cuts made total spending goes on upwards and upwards in cash terms, and usually in real terms as well.

This spending round is a bit more significant than normal. it is the start of a probable five year Parliament, and the start of a Conservative government. The government does wish to control the rate of increase in total spending. It has also ensured real increases in defence, pensions, schools, the NHS, overseas aid and the EU payments, so it needs to probe more incisively the other spending areas that do not have one of these special protections.

This week MPs have been lobbying the Chancellor and the Chief Secretary over what they would like to see in the new budgets. I am therefore inviting all of you to make your requests known.
Some of you will want to cut overseas aid and end our payments to the EU. Those options are not on the table as far as the government is concerned, though ending the EU payments is in the power of the British people when we get to the EU referendum.

MPs have been proposing a number of good ideas. The huge expenditure on climate change research, administration and policies could be usefully cut back. After all, as the proponents tell us the science is now completely settled, why do we still need people studying and researching it in government departments?
The large land banks of the state sector are far bigger than any likely operational needs. It is time to sell some of that land, and to get some of it into better use for homes or commercial premises.
The vicious circle between Housing benefit, higher social housing rents, and larger surpluses by housing associations could be altered to give tenants and taxpayers a better deal.

What are your ideas?

The new Housing Bill marks an important change in housing policy. It starts from the realisation that home ownership has been falling in the UK since 2003, though home ownership is still the preferred form of tenure for 86% of the public. 23% of the public rent but would like to own. 48% of 25-34 year olds now rent, compared to just 21% ten years ago. They do so because many of them cannot afford a home to buy.
The Bill requires planning authorities to make provision in new developments for affordable homes for sale. These are the promised properties offered to first time buyers under the age of 40 at a 20% discount to the market price. It also enshrines the right to buy from social landlords in law, and allows the government to compensate those social landlords for the discount on market value of the property they will suffer from a tenant’s purchase. Social housing providers will be expected to build another property for every one they sell, adding to the total stock as a result.
The Bill encourages social landlords to sell high value subsidised properties when they become vacant. Money from such sales can be used by the public sector to build more homes out of the proceeds of high value property. It also tells Councils to make sufficient planning permissions available to meet the demand for self build and custom housebuilding.
The Bill toughens the law about rogue landlords to assist tenants, introducing a database of such people and legislating for a banning regime for people who have committed offences and are deemed unsuitable to act as landlords in future. Social landlords will also be required to collect a market rent from high income tenants.
The Bill also includes a number of changes to the planning system. This is designed to speed up responses to applications, to make it easier for Councils to establish and amend local plans, and to allow housing to be added to a national infrastructure project. Comments on the Bill would be appreciated.
The Bill also revokes Sections 225 and 226 of Labour’s 2004 Housing Act. These clauses required Councils to assess the needs of gypsies and travellers and prepare strategies to meet their needs. In future the Council will have a duty to consider the needs of all people, without separate specification of the needs of travellers and gypsies.

Yesterday in the Commons the Prime Minister reported back on the recent EU summit. It was dominated by debate over how the EU should respond to the pressures on its borders from economic migrants and refugees. Apparently there were heated arguments between member states who are members of the Schengen common frontiers about how they should police their external border, how they should allow or help people to move within the common border area, and how realistic it is to take the large numbers now seeking to enter the EU.

Mr Cameron was able to report that there was no criticism of the UK for taking a different view of how to handle this problem than that taken by the Schengen countries. The UK was praised for doing more to help migrants and refugees in camps in the Middle East, where the UK’s food and other aid programmes have helped to provide some support for people away from their homes and to spare them the dangerous and expensive journey to the EU. By staying out of Schengen, and by providing a different analysis and policy prescription than the others the UK has been able to help more and avoid some of the obvious dangers of the common policy.

The UK policy has not encouraged more people to risk death or harm by undertaking perilous journeys to the EU, and has done positive things to help those who have had to flee their own homes in war torn parts of the Middle East. The UK also understands that the true answer to the current crisis lies in helping resolve the conflicts and economic disasters which force people to leave their homelands.

I supported the Prime Minister’s stance on Syrian refugees against Labour, Liberal democrats, the SNP and the bishops who want the UK to take refugees and migrants who have made the journey to the EU, acting as a further magnet to others to do so. I also pointed out that the UK has been able to have a different policy on this, and to stay outside the Euro because of past actions over EU integration. It for me underlines the need to gain our freedom to pursue the policies we think best in other areas the EU does currently control.

It’s been a fascinating few weeks e Labour conference and the start of Parliament with Labour’s new leader. It has been a struggle for some of the MPs to adjust, as they discover just how out of touch with their members their policy positions and statements had become.  It is also a reminder that political leaderships do need to lead. They do have to explain to passionate followers what is possible , and to remind  them they are there to serve the wider public and not just the believers in their causes.

Labour  now say they are against austerity. This is the party which first spent all the money, then announced the need for major cutbacks to get the budget deficit under control. This is the party that slashed capital spending especially heavily prior to 2010 as their downpayment on getting the accounts into shape.

They need to discover this truth. Any sensible politician or party is against austerity. I want prosperity for the many, and an economic policy which delivers it. Labour delivered massive austerity to voters through the great  recession in 2008-9. The issue in politics is not between proponents of austerity or prosperity. One of the central issues is how do you best create prosperity for the many?

Labour seems to think you create prosperity by raising taxes on business and successful business people. It thinks you create prosperity by spending more on benefits. It wants to legislate its way to prosperity with more laws and regulations. History tells us this is the opposite of how you bring prosperity about. You do not make the poor rich by seeking to make the rich poor.

Labour also hopes you can create growth by more public spending and more public  borrowing. As our economy recovers the danger of such a route is you might end up with more inflation, and far too high a debt interest burden. Labour is wrong to say the Conservatives are balancing the books at the expense of the poor. Conservative tax cuts take people on low incomes out of tax altogether. Conservative economic policies promotes more jobs and better paid jobs. The best way out of poverty is to have a job, and to move on to a better job.

The tsunami of closures and sackings which the Euro has unleashed on the southern economies of the zone has now washed up as a wave of closures of heavy plant here in the UK. We do not suffer the intense misery of the fixed exchange rates and EU managed budgets afflicting Greece, Spain and Portugal, but we are suffering from the dear energy policy and from the lack of EU action over fair trade in steel.

I have often warned of the threat of EU policy to energy intensive business in the UK. Our aluminium industry has already been dealt bad blows, and our petrochemical and chemical industry is struggling. Today the threats to steel are large. Redcar has been closed. Llanwern and Scunthorpe are under review.

The steel industry has made three requests of the government at its Steel Summit this week. The first is to get our energy prices down. Under EU rules this is difficult or illegal. However, Germany subsidises her heavy industry to combat this problem. All the time we remain in this job destroying body we may need to do the same. The subsidies are needed to offset the high costs of energy built into the energy policies. The longer term solution is to have our own cheaper energy policy based on more modern gas fired power stations and based on the extraction and creation of more of our own energy.

The second is business rate relief. This too would be a possibly legal way of assisting our industry at a time of cut throat competition from abroad threatening to destroy our domestic capacity. Taking a smaller percentage in tax now would be better than attempting to sustain a higher percentage of nothing once the plants have closed.

The third is anti dumping cases where foreign suppliers are dumping. Proving that is never easy , but as the custodians of our trade policy the EU could at least try to do that to help.

The UK is going to need a lot of steel to build cars in our successful motor industry, to modernise and expand the railway, to add to the stock of taller offices and flats in our main cities, to sustain our oil, gas and petrochemical industry and for many other uses. This is worth fighting for. It once again highlights just how much damage to jobs and living standards some EU policies do.

Hard on the heels of Mrs Merkel’s generous invitation to too all Syrians to go to Germany as migrants came her U turn telling them not to with demands to spread refuges and economic migrants around the rest of the EU.

This time Mrs Merkel is doing a deal with Turkey. In return for promises that Turkey will do more to restrain migrants from going through Turkey into the EU, Mrs Merkel has promised in the name of the EU that the EU will make more rapid progress to letting Turks into the Schengen common borders area and will allow relaxation of travel and visa restrictions for Turks. How does she think this will help? By whose authority does she do this? Will the rest of the EU and the Schengen area go along with this? The EU we are told has agreed to give Turkey Euro 500 million of aid in an attempt to restrain more migrants passing through Turkey. Mrs merkel is talking about Euro 3 billion. Where does this leave the agreed policy that the UK pushed for a lower EU budget?

Mrs Merkel is coming in for more criticism in Germany for her ill thought through migrant policy. This will not restore her popularity. It is another reason why the UK needs to control its own borders. It is a reminder that the EU is a German driven and led Europe. This is not what most UK people want, especially when the leader of Germany is so head strong and unsure of touch.

It is not a good idea to offer Mr Erdogan of Turkey these advantages just before an election.Many in the EU are concerned by the drift of Turkish policy on many matters including the Kurds, and do not wish to see Mr Erdogan buttressed by visits and deals just before an important election.

Devolving power is often a good idea. I think it is best done by devolving more power to individuals, families, charities and companies to make their own decisions. It is a good idea to leave them enough of their own money to spend so more can be self reliant. I regard lower taxes, greater prosperity, and more jobs as policies which empower people and devolve power from government of all levels. Often the best way to implement true devolution is to abolish governing quangoes and layers of government. Conservative abolition of regional government in England was just such an excellent move. In successive votes people in various parts of England had made clear their hostility to extra government at regional level.

Many in politics think devolution of power is about shuffling power down from higher authorities to lower or more local authorities, but still keeping it with government. Quite often this policy ends up taking more power away from people and business, and giving more power to government in total. It can lead to higher tax rates, more public spending, larger bureaucracies, more elected officials, more laws, more regulations and more public projects restricting the individual. It is all too easy for a new regional or local government to wish to tax spend and regulate by more than the national government sheds when power passes. Often indeed no power does pass, but local and regional is granted new and additional powers to tax and regulate people on top of existing government demands and decisions.

So what are we to make of this government’s devolution proposals? They have promised us English votes for English issues, which would be a welcome shift in who makes decisions. This does not mean more laws and spending as these decisions are already being made by the Union Parliament. They are encouraging clusters of local authorities to form new more powerful devolved local government, sometimes with elected Mayors. We will need to see if these locally driven schemes pass my true devolution test. Do they reduce central power by enough to ensure people do not end up more highly taxed and regulated? There will be substantial differentiation of these schemes depending on local wishes.

Some object to the development of more of a postcode lottery in our local government arrangements, as different parts of England want different answers. Surely postcode lottery is proof that local decision making has a more important place? If all local areas wanted the same structure and the same policies what would be the point of local decision making? Labour argues a contradictory position. They say they want more local devolution than the government (or indeed than their last government) offers, yet they also say they want a one size fits all solution! That would need to be imposed from above, the very opposite of true devolution.

Yesterday we had an important debate on removing the deficit that has dogged UK public finances for more than a decade. Labour switched sides again, opposing the idea that in normal times there should be no deficit.

The present government plans to cut the deficit from around £70 billion this year to £6bn in 2018-19, and to move into surplus in each of the two subsequent years. This will end a long period of huge build up in public sector debt, which will exceed £1.6tn by 2017-18 (excluding the capitalised value of future unfunded liabilities and without imputing a value to future tax receipts to pay for them). Net debt as a percentage of GDP hit a high of 80.8% of GDP last year and is planned to fall this year and over the next five years, down to 68.5% by 2020-21.

The government assumes the economy will be operating at full capacity by the end of this decade, so the cyclically adjusted borrowing or repayment is the same as the actual one planned. The reduction in deficit comes about through a large increase in tax revenue. The plan is to raise £210 billion a year more in 2020-21 than last financial year. This will both remove the deficit and allow an increase of £109 billion a year in total public spending over the same time period.

It is curious that Labour have decided to ignore the deficit again and to argue for more borrowing. As the debt and deficit fall later this decade so the interest burden reduces, giving more scope to spend on public sector services with less going on interest charges.

UK state debt was £380 bn in 2001-2. It soared to £1080bn by the time Labour left office, and has risen to around £1600 bn since. It is currently falling as a proportion of GDP but still rising in cash terms.

Yesterday the House gave a second reading to the Immigration Bill. This bill strengthens the powers of the authorities to remove illegal migrants. It introduces a deport first appeal later policy to prevent an individual deemed illegal using appeal rights to remain in the UK. It requires all public sector workers dealing with the public to speak fluent English. It makes it a crime for an illegal migrant to open a bank account, obtain a driving licence, rent a home or take a job.

The new law will help the authorities in detecting illegal migrants who have got through the border controls. Many illegals enter the country legally as visitors or students, only to outstay their visa. Anyone offering a job, renting a property, handling a bank account for an illegal migrant will be assisting a crime. Illegal migrants may be located and apprehended if they try to carry out any of the usual tasks of daily life requiring them to drive, to use a bank account or live in a house or flat. Some will object to private landlords and banks having a role in enforcing our border controls, whilst others will welcome this use of intelligence from the community. Immigration officers will gain additional powers to help them require illegal migrants to leave the country.

I made the point to Mrs May in the debate that it is best if illegals are detected at the port of attempted entry and not allowed in. She agreed, but reminded me of the numbers who enter legally only to become illegal later.

There will be a new Director of labour market enforcement. Exploitation of illegal migrants by bad employers is already against the law. The new regime will make it more likely employers of illegal labour will be found and prosecuted. The employment of illegal labour often leads to other abuses, with low pay, long hours, and lack of many of the normal terms of an employment contract.

Marrying the needs of a free society with the wish to control illegal migration is not easy. We want students to come to study at UK universities, investors to come and set up businesses here, visitors to come and enjoy our facilities and friends and family from abroad to be able to visit their contacts in the UK. We want these normal exchanges and movements to happen freely and as easily as possible. At the same time we wish to stop illegal migrants coming here, or visitors turning into illegal migrants, as there needs to be a control on how many additional permanent residents and workers the economy can absorb.

Mr Burnham for Labour showed some evolution in their thinking. They did not oppose all parts of the Bill, and he did say he wishes to place limits on the free movement of labour from the rest of the EU. Labour now recognises that large scale migration can depress wages and place undue strains on public services in places receiving substantial numbers of new residents.

The unexpected reform in the Chancellor’s speech to the Conservative conference was his proposal on business rates. He has offered to local government the transfer of all business rate revenue. This £26 billion a year would replace all the current grant income Councils receive from central government.

The reform will be complex. In order to make it work the Treasury will need to identify additional spending areas to transfer to local government, as business rate revenue exceeds grants. These will need to be agreed with Councils and the necessary arrangements put in place for them to run this extra spending.

The Treasury will wish to keep an overall limit on the level of business rates. They were transferred to central government for that very reason, to prevent local Councils trying to extract too much from business, which can work in the short term but creates longer term problems as business leaves a high tax area or fails to come to invest there.

The Treasury will also need to provide a means of sending some of the business rate money collected in a successful and prosperous area to poorer parts of the country. The City of London is the most extreme example, with a huge business rate income but few overnight residents to spend the tax on. As now there will need to be some formula for evening out the money, and a  new mechanism to claw it back from Councils in receipt of it.

Areas with elected Mayors will be able to increase the tax for better infrastructure. This power will need careful use, as business is more worried in the short term by the level of the tax than by what the tax will be spent on.